Defense Health Agency (DHA) Contract Operations Division – Falls Church Acquisition Desktop Reference Guide
Updated January 2013
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TABLE OF CONTENTS
The purpose of this Desktop Reference Guide is to provide guidance on preparing Defense Health Agency (DHA) acquisition packages. It is intended to be a user friendly “how to” guide with background discussions, excerpts from key governing documents, and hyperlinks to other reference material. It links to key DHA Acquisition Management and Support (AM&S) Directorate acquisition policy and procedures documents and also links to several DHA acquisition-related examples and templates.
The intended audience for the Desktop Reference Guide consists of Task Managers, Program Managers (PMs), contracting personnel, and other customers within the DHA Requiring Activities engaged in preparing DHA acquisition packages and administering DHA contracts. The Desktop Reference is organized in a functional fashion, with special emphasis on requiring activity procurement planning and post-award administration responsibilities. It is a living document that will be updated regularly to meet the needs of the DHA acquisition customers, contracting personnel, and contract administrators.
This guide is applicable to all DHA procurements executed through the DHA AM&S Contract Operations Division – Falls Church (COD-FC).
1.3.1 Order of Precedence.
This guide is intended to implement the following Federal procurement regulations, policies, and procedures, and should in no way be interpreted as replacing or superseding such guidance. The AM&S COD-FC will endeavor to keep this reference up-to-date, but current law and policy will always take precedence over the contents of this guide.
Federal Acquisition Regulation (FAR), on the web at FAR.
Defense FAR Supplement (DFARS), on the web at DFARS.
1.4 Acronyms and Definitions
Acquisition terms are defined within the FAR Part 2.
2.0 PROCUREMENT ETHICS
2.1 Procurement Integrity
Federal employees hold positions of public trust and all their actions are expected to reflect their loyalty to the Constitution, laws and ethical principles above private gain. Employees fulfill that
public trust by adhering to general principles of ethical conduct as well as specific ethical standards. In addition, contractors seeking or doing business with the Government are
expected to adhere to firm ethical standards. Certain laws and ethical standards apply and must always be adhered to. The Department of Defense (DoD) Directive
DoD 5500.7-R, Joint Ethics Regulation 5500.7-R provides guidance on comprehensive ethical issues. Specific
standards apply to the procurement process and the manner in which federal and contractor personnel conduct business with each other. Specific guidance on procurement integrity is provided within
FAR Part 3.104. Three key over-arching principles dictate that procurement officials:
DHA Memorandum, “Implementing Processes to Ensure Ethics and
Integrity in TRICARE Management Activity Acquisition”, March 15, 2010, reminds all DHA workforce of the necessity for ethical behavior in all acquisition activities. Ethical conduct and
maintaining integrity are daily responsibilities of everyone, and they must be intrinsic parts of our everyday activities from the top down. All DHA personnel, at every level, not only those involved
with managing contracts, must work to ensure integrity and eliminate both actual and perceived unethical behavior.
DHA Memorandum, “Ethics and Integrity in TRICARE Management Activity Acquisitions”, June 11, 2012, reminds
the DHA workforce of the necessity for ethical behavior in all acquisition activities and reiterates the Secretary of Defense’s recently released
Memorandum, “Ethics, Integrity, and Accountability”, dated May 2, 2012. Integrity
and ethics must drive all decisions and actions of those involved with managing acquisitions, developing requirements, and overseeing the financial aspects of contracts. In other words, the highest
ethical standards must be exercised by all DHA personnel at all levels. Not only must we ensure that contracts are acquired in an environment reflective of the highest ethical standards, but we must also
ensure that our professional conduct meets the expectations of the American public and honors the war fighters who protect our freedoms.
2.1.1 Procurement Official.
For the purposes of DHA procurements and in accordance with FAR Part 3.104-3, any individual (regardless of whether they are a federal or contractor employee) who has access to procurement sensitive information or participates in any way in the following activities is considered to be a “procurement official”:
2.1.2 Non-Disclosure of Procurement Information.
Safeguarding procurement information is critical to maintaining government procurement integrity. In accordance with
FAR Part 3.104-4 and
TAD 03-01, Rev 001, "Non-Disclosure Agreement", January 10, 2013 and its associated
Procedures, Guidance and Instruction (PGI)
203.104, "Improper Business Practices and Personal Conflicts of Interests", January 10, 2013, and
DHA Source Selection Non-Disclosure Agreement, DHA Form 821,
procurement officials shall not, other than prescribed by law, knowingly disclose contractor bid or proposal information, or source selection information, before award of a contract to which the information relates.
Contractor bid or proposal information includes:
Source selection information is information prepared for use by a Federal Agency for the purpose of evaluating a bid or proposal. Source selection information includes:
See TAD 15-03, Rev. 000, Source Selection, November 30, 2011,
PGI 215.3, May 21, 2012, and
DHA Source Selection Guide and Template
, August 30, 2012 for additional Source Selection information.
2.1.3 Contractor Gratuities to Government Personnel.
In accordance with FAR Part 3.101-2, no Government employee may solicit or accept, directly or indirectly, any gratuity, gift, favor, entertainment, loan, or anything of monetary value from anyone who has or is seeking to obtain Government business with the employee’s agency. Likewise FAR Part 3.204 states that contracts may be terminated and contractors debarred, suspended and/or fined if it is determined that a contractor:
2.2 Inherently Governmental and Critical Functions
FAR Part 37.102(c) directs that "Agencies shall not award a contract for the performance of an inherently governmental function”.
In addition, the current regulatory requirements FAR Subpart 7.5; DFARS Subpart 207.5; DFARS PGI 207.5, and DoD Instruction (DoDI) 1100.22, April 12, 2010, the Office of Federal Procurement Policy (OFPP) has issued a final policy memorandum, Policy Letter, 11-01 “Performance of Inherently Governmental and Critical Functions”, dated October 11, 2012. This policy letter provides a single definition for the term ‘‘inherently governmental function’’ that addresses any deficiencies in the existing definitions and reasonably applies to all agencies and establishes criteria to be used by agencies to identify ‘‘critical’’ functions and positions that should only be performed by Federal employees, and provides guidance to improve internal agency management of functions that are inherently governmental or critical. Now that the final policy is issued, OFPP will be working to develop and implement appropriate changes to the FAR to implement this policy letter. The OFPP Policy Letter 11-01 is intended to implement direction in the President’s March 4, 2009, Memorandum on Government Contracting that requires OMB to ‘‘clarify when governmental outsourcing for services is and is not appropriate, consistent with section 321 of Public Law 110–417 (31 U.S.C. 501 note).’’ The policy letter:
The policy letter includes examples to help agencies identify closely associated functions and a checklist of responsibilities that must be carried out. This is a developmental area of policy. Pending conclusion of the update in processes, the DHA AM&S Policy Alert 11-86, “Inherently Governmental Functions”, November 11, 2011, summarizes the current baseline of requirements detailed in the references cited above, which should be read in their entirety for complete information.
2.3 Personal vs. Non-Personal Services
FAR Subpart 37.101 provides a definition of non-personal services contract:
"Non-personal services contract" means a contract under which the personnel rendering the services are not subject, either by the contract’s terms or by the manner of its administration, to the supervision and control usually prevailing in relationships between the Government and its employees.”
Further, FAR Subpart 37.104 defines personal services contracts and discusses their applications:
(a) A personal services contract is characterized by the employer-employee relationship it creates between the Government and the contractor’s personnel. The Government is normally required to obtain its employees by direct hire under competitive appointment or other procedures required by the civil service laws. Obtaining personal services by contract, rather than by direct hire, circumvents those laws unless Congress has specifically authorized acquisition of the services by contract.
(b) Agencies shall not award personal services contracts unless specifically authorized by statute (e.g., 5 U.S.C. 3109) to do so.
DHA is not authorized to issue personal services contracts. To ensure that non-personal service contracts remain as such requires continual oversight.
2.5 Use of Appropriated Funds
Under 31 U.S.C. § 1301(a) (the "Purpose Statute"), appropriated funds are available only for the objects for which the appropriations were made. Congress cannot and does not specify every item of expenditure in DoD appropriation acts. Thus, under the "necessary expense rule," appropriations made for particular objects, by implication, confer authority to incur expenses that are reasonably necessary or incident to the proper execution of those objects. The DHA Director for Resource Management has published guidance on what constitutes proper use of DHA funds.
2.6 Office of General Counsel Point of Contact
The DHA Office of Counsel (OGC) will be happy to provide answers to specific questions dealing with issues of procurement ethics. This is one area where it is much better to be safe than sorry. Anyone within DHA having questions concerning procurement ethics should be encouraged to contact DHA OGC - (703) 681-6012.
3.0 ACQUISITION PLANNING
Proper planning and documentation is crucial to effective acquisition actions. The success of any acquisition is directly related to the time and effort expended completing acquisition planning tasks.
The acquisition planning process begins as soon as a need is identified and involves a general consideration of all the elements that will be required in connection with a particular acquisition. Planning is the
most effective method of preventing or resolving potential problems early in the process. Early in the acquisition planning process, the DHA PMs should seek assistance and begin coordination with the COD-FC
Contracting Officer (CO).
The main purpose of this section of the Desktop Reference is to provide guidance on planning for DHA contracts and funds transfers and preparing DHA acquisition packages. See the DHA
PGI 207.1, Acquisition Plans, December 4, 2012,
DHA Acquisition Planning Guide, Acquisition Plan Template, Acquisition Plan Signature Approval Template, and DHA Briefing “Development of Written Acquisition Plans”.
Note: Please ensure all FY 2014 DHA procurement packages are submitted to the COD-FC in accordance with the deadlines established in DHA Memorandum,
FY 2014 Procurement Deadlines and Cutoff Dates, March 20, 2014.
3.1 Roles, Responsibilities, and Authority
There are numerous organizational participants that play pivotal roles regarding the effective use, administration, and management of DHA acquisitions. Together they form a partnership essential to achieving contracting goals and objectives. These participants have both separate and mutual responsibilities, with the lead responsibility often shifting from one participant to another during the acquisition process. Detailed information on the roles and responsibilities of DHA acquisition and contract administration officials is available in the: DHA PGI 207.1, Acquisition Planning, December 4, 2012.
3.1.2 Contracting Officer’s Representatives.
Contracting Officer’s Representatives (CORs) are individuals with an appropriate functional or technical background, who have been nominated, completed required training, and have been appointed to perform certain
administrative functions on behalf of the CO, as sited in TAD 01-06, Contracting Officer’s Representative, October 23, 2012.
A COR is required to oversee all service contracts, except where simplified acquisition procedures are used, the requirement is not complex, and the CO documents in writing why the appointment of a COR is not
necessary (DFARS PGI 201.602). A COR may also be required for non-service contracts at the CO’s discretion.
DHA CORs will be nominated and appointed in accordance with the process outlined in DHA PGI 201.602-2, using the
COR Nomination Letter Template.
The COR’s specific duties are defined in a
COR Designation Letter issued by the CO. The, “DoD Standard for Certification of Contracting Officer's Representatives (COR) for Service Acquisitions,” March 29, 2010, classifies requirements into three types by complexity, and establishes specific training and experience requirements for each:
In addition to DoD-mandated training, DHA CORs must complete additional DHA-mandated training as specified. Documentation of completion of DHA-mandated training must be provided to the CO in accordance with
TAD 01-06. The DoD requires the use of the DoD Contracting Officer Representative Tracking Tool (CORT) to collect COR-related information and manage the COR certification, nomination, appointment, and revocation processes. Prior to designation, the COR Nominee must demonstrate completion of all required DoD and DHA training by uploading completion certificates into the CORT Tool, or by providing them to the CO in the event a CORT Tool waiver applies. For additional information see the Under Secretary of Defense (USD) Acquisition, Logistics and Technology (AT&L) Memorandum, “Deployment of the Department of Defense (DoD) Contracting Officer Representative Tracking Tool (CORT Tool)” dated March 21, 2011.
The CORT Tool is a web management application designed to be used to nominate, appoint, track, and revoke an individual as a COR against a DoD contract. The Tool is Common Access Card (CAC)-enabled and available
to all members of the DoD with internet access and an Army or Defense Knowledge Online account. If you need an account, go to the following web page:
https://www.us.army.mil. Under ‘New User’, Click on ‘Register with a CAC’ and fill out the “Account Registration” Form. The Tool allows a prospective COR,
COR Supervisor and CO/Contract Specialist (CS) to electronically process nominations of CORs for one or multiple contracts. A COR must be a government employee. Contractors cannot serve as CORs. In accordance
with the DoD CORT Tool User’s Guide and
DHA CORT Tool Deployment Plan, DHA CORs and COR Nominees are responsible for creating and maintaining a CORT Tool profile.
184.108.40.206 COR for the Prime Contract.
In addition to the CS, COD-FC will nominate an individual to act as the COR to oversee each prime contract. The COR for the prime contract serves as a first level resource to those individuals administering contracts or task orders for a given contract vehicle. The Program Management Office (PMO) is responsible for defining requirements, preparing supporting documentation, estimating costs, obtaining funding, evaluating contractor Technical Proposals, and managing the resulting contract or task order. Each PMO shall designate one individual to be the COR for each contract or task order. This individual must comply with the requirements of the COR Training Plan referenced above and fulfill the duties outlined in the COR Designation Letter also referenced above.
3.2 Acquisition Support
The rules regarding the acquisition of DHA requirements are often complex and may vary depending on the circumstances. DHA managers at all levels must nevertheless become familiar with these rules and abide by the procedures for DHA acquisitions.
COD-FC has developed a comprehensive Contract File Index – Large Services and multiple Contract Templates outlining required documentation for DHA acquisitions, depending on the type of transaction. All procurement packages for contracts/orders in excess of $10,000,000 (including option periods) will be reviewed and approved by the Director, DHA prior to sending the requirement or any Defense Health Program funds to the performing activities. COD-FC has developed Purchase Request Worksheet (PRW) Package Review Procedures and Template to facilitate this review.
The DHA Support Guide has been updated to include a recent DoD requirement for service contracting identified in the Deputy Secretary of the Defense (DEPSECDEF) memorandum, “Implementation of Section 324 of the National Defense Authorization Act for Fiscal Year 2008 (FY 2008 NDAA)” - Guidelines and Procedures on In-sourcing New and Contracted Out Functions, April 4, 2008. See DoD Instruction (DoDI) 1100.22 Policy and Procedures for Determining Workforce Mix, dated April 12, 2010, for additional information and guidance on workforce mix.
3.3 Acquisition of Services
Within DHA, special requirements apply regarding the acquisition of services. Section 812 of the FY 2006 Defense Authorization Act established a series of requirements for acquisition of services within DoD. This legislation directed the Secretary of Defense to establish and implement a management structure for the procurement of services for the DoD.
As provided in DoDI 5000.02, acquisition of services shall support and enhance the warfighting capabilities of the DoD while meeting the following objectives:
3.3.2 DHA Procedures for the Acquisition of Services.
To ensure compliance with the policies outlined in Enclosure 9, Acquisition of Services, of DoDI 5000.02, dated December 8, 2008; DHA has issued guidance in the Acquisition of Services Guide, December 2012, which includes procedures for the acquisition of services. These procedures apply to all DHA acquisitions of services executed through COD-FC, except for research and development or construction activities, and apply to any task order or any transfer of funds to acquire a service on behalf of DHA.
3.4 Acquisition of Hardware and Software
COD-FC has developed a Request for Quote template to be used when ordering hardware or software.
3.5 Contracting Activities
3.5.1 Use of DHA “Preferred” Contracting Activities.
DHA has established a number of acquisition support agreements with both DoD and non-DoD contracting activities for acquisition support requirements of a recurring nature. Under these Preferred
Contracting Activity (PCA) umbrella agreements, the PCAs will provide acquisition support to multiple DHA customers. DoD contracting activities are aware of and bound by a number of legal and
regulatory requirements ensuring appropriate use of DoD resources. If the desired contracting activity is a non-DoD agency, adherence with DoD regulations and DHA interagency acquisition support policy is the
responsibility of the requiring DoD activity. The use of non-DoD contracting activities requires special planning, review and approval consistent with the
DHA Support Guide. See the
COD-FC Intranet Contract Vehicle
folder for respective Contract Vehicle User Guides and Templates.
In cases where the external contracting activity does not have a current acquisition support agreement with DHA, a separate agreement must be coordinated and approved. DoDI 4000.19 and the DHA Support Guide provide guidance on support agreements. Applicable agreements and templates can be located in the support agreement handbook.
3.5.3 Intra-governmental Acquisition Support Agreements and Orders.
A written support agreement is required when a DoD activity requires support from a non-DoD Federal activity in order to accomplish an authorized task more simply and economically by using the non-DoD activity’s experience and/or expertise. All proposed support agreements that could possibly result in the award of a Government contract will be coordinated with COD-FC in advance and will adhere with FAR Subpart 9.5 and the DHA Organizational Conflicts of Interest (OCI) procedures, TAD 09-01, Rev. 000, Organization Conflicts of Interest, November 8, 2011, PGI 209.570-3, May 21, 2012, and the DHA OCI Briefing.
3.6 Contract Risk Management
All contracting actions require the acceptance of some level of risk and development of plans to manage the risk. DHA requiring activities must consider contract risk as early as possible in the acquisition planning process. Contract risk management must be forward-looking, structured, insightful and continuous. Risk management should be an integral part of any procurement process beginning with planning and preparing the Request for Proposal (RFP) or Request for Quote (RFQ), through proposal evaluation, and continuing throughout the life of the contract. The following are some of the key elements of risk management:
Risk is a measure of the potential inability to achieve overall objectives within defined cost, schedule, and technical constraints. Risk has two components:
This component consists of the probability/likelihood of failing to achieve a particular outcome.
This component consists of the consequences or impacts of failing to achieve that outcome. Some examples of adverse contracting consequences include:
3.6.2 Risk Management.
Risk management is the act or practice of dealing with risk. It includes planning for risk, assessing (identifying and analyzing) risk areas, developing risk-handling options, monitoring risks to determine how risks have changed, and documenting the overall risk management program.
220.127.116.11 Risk in Program Management:
Understanding program management risk requires looking forward at potential difficulties that may impact the cost, schedule or performance in the acquisition process. Risk must be documented in every acquisition requiring an acquisition plan. The acquisition team must describe technical, cost, and schedule risks independently and indicate a risk level (low, moderate, high) for each category. The acquisition plan must discuss mitigation strategies for risks classified as moderate and high.The Risk Management Guide for DoD Acquisition can provide help in understanding these issues.
18.104.22.168. Risk in Source Selection:
It is vital in the source selection process to understand and articulate the methods that will be employed to arrive at the selection of a contract awardee. Failure to negotiate pitfalls here can result in successful protests and delay the implementation of contract actions resulting in loss of service to the customer. The Department of Defense Source Selection Procedures and TAD 15-03, Rev. 000, Source Selection, November 30, 2011, and PGI 215.3, May 21, 2012 can provide valuable assistance in this process.
3.7 Contract Type Selection
There is no single contract type that is right for every contracting situation. Contract type selection is done on a case-by-case basis considering
contract risk, incentives for contractor performance, and other factors such as the adequacy of the contractor’s accounting system.
Contract Type Decision Guide is a tool designed by COD-FC for use as a
starting point in determining a suitable contract type for your procurement.
FAR Part 16 provides additional information on understanding and
selecting contract types. Contract types assign varying degrees of risk to the Government and contractor based on the ability of the Government to articulate the desired outcome.
FAR 16.103 mandates that, with the exemption of most Firm Fixed Priced (FFP) contracts, the CO include documentation in the contract file to show why the particular contract type was selected. To support this requirement, DHA requiring activities are required to submit a full justification as part of the required acquisition package cover memo whenever requesting contract types other than FFP. The CO will make the final determination of contract type, taking into consideration input received from COD-FC and the DHA Requiring Activity. In general, the following guidelines should be considered when determining the contract type.
3.7.1 Fixed Price Contracts.
Commercially available items must be purchased using FFP or fixed-price with economic price adjustment contracts. Fixed price contract types include the following:
22.214.171.124 Firm Fixed Price Contracts.
FFP contracts provide for a price that is not subject to any adjustment on the basis of the contractor’s cost experience in performing the contract. This contract type places upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss. It provides maximum incentive for the contractor to control costs and perform effectively and imposes a minimum contract administrative burden upon the contracting parties.
126.96.36.199 Fixed Price with Economic Adjustment.
A Fixed Price with Economic Adjustment (FP/EA) contract provides for upward and downward revision of the stated contract price upon the occurrence of specified contingencies. Economic price adjustments are of three general types:
188.8.131.52 Fixed Price Incentive.
A Fixed Price Incentive (FPI) contract is a fixed-price contract that provides for adjusting profit and establishing the final contract price by a formula based on the relationship of final negotiated total cost to total target cost. FPI contract would be used with services of a commercial nature, where quality or performance targets are easily established and measured. For example, a technology help desk contract, where call wait time is measured by an automated system, would be a good candidate for FPI.
184.108.40.206 Fixed Price Re-determinable.
A Fixed Price Re-determinable (FPR) contract provides for a firm fixed price for an initial period of contract deliveries or performance; and prospective redetermination, at a stated time or times during performance, of the price for subsequent periods of performance. A fixed-price contract with prospective price redetermination may be used in acquisitions of quantity production or services for which it is possible to negotiate a fair and reasonable firm fixed price for an initial period, but not for subsequent periods of contract performance.
220.127.116.11 Fixed Price with Award Fee.
A Fixed Price with Award Fee (FPAF) may be used when the Government wishes to motivate a contractor and other incentives cannot be used because contractor performance cannot be measured objectively. FPAF contracts establish a fixed price (including normal profit) for an effort. In addition, an award fee will be paid based on the contractor’s performance against an established award fee plan. FPAF contracts may only be used if the administrative costs of conducting award-fee evaluations are not expected to exceed the expected benefits; procedures have been established for conducting the award-fee evaluation; the award-fee board has been established; and an individual above the level of the CO approved the fixed-price award-fee incentive.
3.7.2 Cost-Reimbursable Contracts.
Cost-reimbursement contracts are suitable for use only when uncertainties involved in contract performance do not permit costs to be estimated with sufficient accuracy to use any type of fixed-price contract. Complex or unique services for which quality of performance is paramount frequently fall into this category. A cost-reimbursement contract may be used only when: the contractor’s accounting system is adequate for determining costs applicable to the contract; and appropriate Government surveillance during performance will provide reasonable assurance that efficient methods and effective cost controls are used. Cost-reimbursable contracts can include reimbursement for cost only, cost sharing, cost plus incentive fee, cost plus award fee, and cost plus fixed fee. Cost-reimbursable contracts may not be used for the acquisition of commercial items.
3.7.3 Time and Materials.
A Time and Materials (T&M) contract has elements of both fixed price and cost-reimbursable contracts. A T&M contract provides for acquiring supplies or services on the
basis of: direct labor hours at specified fixed hourly rates that include wages, overhead, general and administrative expenses, and profit; and materials at cost, including, if
appropriate, material handling costs as part of material costs. Within DoD, T&M contracts are the least preferred contract type. Because T&M contracts have been
misused in the past, DoD has imposed certain restrictions. FAR 16.601 specifies that T&M
contracts may be used only after a Determination and Findings (D&F) has been signed by the CO for use of a T&M award. When the DHA requiring activity recommends the
use of a T&M type contract, the period of performance will be limited to three (3) years, unless a very strong justification is made and approved by the supporting contracting office.
3.7.4 Labor Hour Contract.
A labor-hour contract (LH) is a variation of the T&M contract, differing only in that the contractor does not supply any materials.
3.8 Other Contracting Methods
The Federal Acquisition Streamlining Act of 1994, Public Law 103-355 (FASA), provided a number of authorities that streamlined the acquisition process and made a number of substantial
changes in the manner in which relatively low dollar procurements are conducted. FASA created a micro-purchase threshold of $3,000 and a SAT of $150,000. Generally, increasingly
restrictive provisions are placed on purchases as the dollar value of the purchased item increases. The term "splitting requirements" refers to the practice of breaking down
known requirements into two or more purchases to reduce the dollar value of each below restrictive thresholds for competitive simplified acquisition procedures or full-and-open competitive
procedures. FAR 13.003(c)(1) prohibits this practice. Simplified Acquisition
Procedures are addressed within FAR Part 13. The methods used within DHA to make simplified acquisitions include:
3.8.1 Blanket Purchase Agreement.
A Blanket Purchase Agreement (BPA) is a set of pre-negotiated terms and conditions governing future transactions between the Government and the vendor. It is not a contract, but simply an agreement on specific conditions or terms for future actions if and when they occur. A BPA may be established with any responsible vendor when it is likely that there will be repetitive purchases during a stated period within a broad class of supplies or services, and the exact items/services, quantities and delivery requirements cannot be accurately forecasted.
3.8.2 Purchase Orders.
A purchase order, awarded as a result of a quotation, is an offer by the Government to buy certain supplies or services in accordance with specified terms and conditions contained in the order.
3.9 Contract Vehicle Selection
Through its PCA agreements with external contracting activities, DHA has established a suite of contract vehicles, which are key components of the DHA acquisition infrastructure and their use is preferred over all other vehicles.
3.9.1 GSA Schedules.
If an existing DHA contract vehicle cannot be used, DHA may order from any existing General Services Administration (GSA) schedule, provided that the scope of the schedule adequately covers the scope of the intended
work and the use of a non-DHA contract vehicle is approved by the Director, AM&S. These schedules have already met the requirements for “full and open” competition, and only require a “fair opportunity” phase
for award. Please refer to the
GSA Federal Supply Schedule (FSS) User’s Guide and
GSA Task Order Template.
The guide describes the roles and responsibilities, including those of GSA, in placing orders against GSA Federal Supply Schedules (FSS). See also the GSA e-Library.
When using a GSA schedule, it is important to note that DHA Organizational Conflict of Interest (OCI) policy and procedures, as established in TAD 09-01 Rev. 000, November 8, 2011 and TMA PGI 209.570-3, May 21, 2012, still apply. Once a contractor has been issued an order from one category, they are then exempt from awards in another category, unless a specific OCI mitigation plan has been submitted and approved in writing.
3.9.2 Non-DHA Multiple Agency Contracts.
Agencies outside of DHA sometimes issue a contract, or set of contracts, for PM services, which may be available to DHA if an existing DHA contract vehicle, cannot be used. Examples include the NITAAC CIO-SP contracts and Veterans Affairs (VA) management studies contracts. Typically, these Multiple Award Contracts (MACs), ID/IQ contracts have already met the requirements for “full and open” competition, and only require a “fair opportunity” phase for award. Like GSA contracts, a MAC is a non-DHA contract vehicle and its use must be approved by the Director, AM&S.
Usually, the agency holding these contracts will charge DHA a “usage fee” for using the contract. Typically, the usage fee is a percentage of the value of the order. Caution should be exercised when considering these vehicles, to determine if some other approach will yield the same benefit without expenditure of additional fees.
3.10 Competition Requirements
Federal Law defines acquisition methods and processes. There are three levels of competition in contracting.
3.10.1 Full and Open Competition.
10 United States Code (USC) and FAR Subpart 6.1 requires COs to promote
and provide for full and open competition in soliciting offers and awarding Government contracts. Full and open competition when used with respect to a contract action, means that
all responsible sources are permitted to compete. This approach potentially provides a large universe of prospective offerors. The more proposals, the better the chances for
the Government to obtain a good "buy". Contracting without providing for full and open competition is a violation of statute, unless it is permitted by one of the exemptions listed in
FAR 6.302. Lack of advance planning and/or concerns related to amount/type of funds available are NOT justifications for sole sourcing a contract action. Full and Open acquisitions include contracting through sealed bids and competitive proposals.
3.10.2 Fair Opportunity.
Fair opportunity for orders under multiple award contracts, as described in
FAR Subpart 16.505 and
FAR Subpart 8.4 (for GSA orders), means the CO must provide each awardee a fair opportunity to be considered for each order exceeding $3,000. In providing fair opportunity the CO must:
Section 803 Requirements.
The Fiscal Year (FY) 2002 National Defense Authorization Act (NDAA) invoked specific guidance to the DoD for application of “fair opportunity”. This guidance is implemented in DFARS 208.404-70 and is summarized in the following boxes:
Notice may be provided to fewer than all contractors… if notice is provided to as many contractors as practicable
offers were received from at least three contractors that can fulfill the work requirement
afford all such contractors a fair opportunity to make an offer and have that offer fully and fairly considered by the official making the procurement.
the CO determines in writing that no additional contractors that can fulfill the work requirements could be identified despite reasonable efforts to do so.
When using a DHA contract vehicle this guidance is clear, each contract holder must be given an opportunity to bid. However, when using GSA schedules, the guidance is more difficult to implement. Many GSA schedules, such as the IT Schedule and MOBIS, have hundreds, or even thousands of contractors. When ordering from GSA schedules, DHA must identify a strategy that will ensure receipt of at least three quotes. The general approach is to solicit bids from at least ten (10) schedule holders. Should this approach not yield at least three bids, then the Government will solicit from ten more contractors. If this also fails, the CO will identify a strategy which may include a third solicitation or may coordinate with the PM to document the attempts to solicit bids and will make an award based on the bids received.
18.104.22.168 Exceptions to Fair Opportunity.
The only exceptions to the above procedures are:
For additional information, refer to in FAR Subpart 8.405-6 (GSA) or in
FAR Subpart 16.505 (ID/IQ) for a discussion of exceptions to Fair Opportunity.
3.10.3 Sole Source.
Sole source acquisition means a contract for the purchase of supplies or services that is entered into, or proposed to be entered into, by an agency after soliciting and negotiating with only one source.
Sole source acquisitions are permitted only for conditions described in
FAR Subpart 6.302. No action can be taken on a sole
source acquisition until a
Justification and Approval (J&A) as required by
FAR Subparts 6.303 and
FAR 6.304 has been prepared.
The FAR 6.304 J&A approval levels were recently changed. To be consistent with the FAR, the Director, Defense Procurement and Acquisition Planning (DPAP) has directed that both J&As for sole source orders under Federal Supply Schedules, and determinations to waive competition for orders for supplies or services under MACs must be approved by individuals at the levels cited in FAR Subpart 6.304. These procedures apply whether an order is placed by DoD or on behalf of DoD.
for Other Than Full and Open Competition IAW FAR Subpart 6.3 shall be prepared in draft form by the requiring activity in consultation with the CO, and in accordance with the FAR Subpart 6.3. Highlighted portions of the J&A Template should be replaced with non-highlighted text specific to the contracting action and justification. The draft J&A should be provided electronically to the CO for their review, completion and routing according to the contracting agency’s procedures.
3.10.4 Limited Source.
Under the Multiple Award Schedule Program a special
required if the acquisition is restricted to limited sources IAW FAR 8.405-6. This J&A shall be prepared in
draft form by the requiring activity in consultation with the CO, and in accordance with the FAR Subpart 8.4. Highlighted portions of the J&A Template should be replaced with non-highlighted text specific to the contracting action and justification. The draft J&A should be provided electronically to the CO for their review, completion and routing according to the contracting agency’s procedures.
3.10.5 Competition Guide.
DHA managers should always promote adequate levels of competition to encourage the best firms (in terms of their track records on pricing, quality, timeliness, and integrity), to offer DHA quality products and services at reasonable prices.
3.10.6 Publicizing Contract Actions.
Under certain circumstances federal agencies are required to post information related to pending solicitations.
22.214.171.124 Full and Open Procurements.
For Full and Open procurements, the FAR requires all federal agencies to provide access to their notices of solicitation by making them available through a Government-wide Point of Entry (GPE). The GPE serves as the single point where the public can access announcements of Government business opportunities greater than $25,000, including synopses of proposed contract actions, solicitations, and associated information, electronically. Posting of solicitations through the GPE is typically the responsibility of the supporting contracting agency.
126.96.36.199 Brand Name Specifications.
Brand Name acquisitions require a
(see FAR Subpart 6.302, or
FAR 8.405-6), depending on the contract vehicle used. DHA Requiring Activities should limit the use of brand name specifications so as to maximize competition. However, for acquisitions exceeding $25,000 that do use brand name specifications, including simplified acquisitions and sole source procurements, federal agencies are required to post the brand name justification or documentation to either one of the following sites:
The GPE at: http://www.fedbizopps.gov/, with the solicitation, or;
The e-Buy system at: http://www.ebuy.gsa.gov, with the RFQ when using the GSA FSS.
3.11 Contract Performance Statement
The way in which contract performance is specified can have enormous impact on contractor performance, efficiency, quality and cost to the Government. The type of contract, contract vehicle, contracting source,
and desired end product all have a bearing on the strategy used to develop a contract performance statement. If the work is for services, then the contract/order must include a performance statement, which describes
what will determine successful performance by the contractor. The performance statement will also serve as the basis for administration of the contract by the government. The performance statement is
probably the single most critical document in the acquisition process. The performance statement will take one of two forms, a
Performance Work Statement (PWS), or a Statement of Objectives (SOO).
3.11.1 Performance Based Acquisition.
DoD has placed great emphasis on using a Performance-Based Acquisition (PBA) approach to acquiring goods and services. All DHA requiring activities are strongly encouraged to utilize this technique for acquiring goods or services. Both the FAR and Public Law 106-398 (Section 821) specifies that performance-based acquisition is the preferred method for acquiring services. In an effort to increase performance gains and contract savings the USD AT&L has established DoD-wide goals that 50 percent of service acquisitions, measured in terms of dollars, are to be performance based. There are certain key characteristics that make a contract performance-based.
According to FAR 37.601, prescribes a performance-based acquisition as having the following three key attributes:
To help implement this guidance, DoD has developed a Performance-Based Service Contracting (PBSC) Guidebook, available at: DoD Guidebook for PBSC. This guidance takes the FAR description of a performance-based contract with the addition of a Quality Assurance Surveillance Plan (QASP) as an essential element. According to the DoD Guidebook for PBSC, to be considered performance-based, an acquisition should contain, at a minimum, the following elements:
The DoD Guidebook for PBSC clearly addresses each of these key elements of a performance-based service contract:
3.11.2 Quality Assurance Surveillance Plan.
The QASP provides a surveillance standard for monitoring service performance and provides a systematic method to evaluate contractor performance. While the DFARS requires surveillance, it does not prescribe specific methods to evaluate performance.
A good QASP adds structure, consistency and objectivity to the surveillance process. COD-FC has developed a QASP Template to be used. The completed QASP should:
Development of the QASP is a key component of the PBA planning process. The connection between the PWS and the QASP is so fundamental that
FAR 46.401, specifies that the QASP should be prepared in conjunction with the preparation of the SOW. The QASP is nevertheless a “living document” and the Government may review and revise it on a regular basis. The Government should coordinate any QASP changes with the contractor.
3.12 Socio-Economic Procurement Goals
It is the policy of the Government to provide maximum practicable opportunities in its acquisitions to small business, veteran-owned small business, service-disabled veteran-owned small business, HUBZone small business, small disadvantaged business, and women-owned small business concerns. Business owners who certify that they are members of named groups (Black Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans) are to be considered socially and economically disadvantaged. Section 8(a) of the Small Business Act (15 U.S.C. 637(a)) established a program that authorizes the Small Business Administration (SBA) to enter into all types of contracts with other agencies and let subcontracts for performing those contracts to firms eligible for program participation. The SBA’s subcontractors are referred to as “8(a) contractors.”
3.12.1 Small Business Goals.
In accordance with FAR Subpart 19.502-2(a), all acquisitions expected to exceed $3,000, but not over $150,000, are reserved exclusively for small business concerns. These requirements will be set aside unless the CO decides there is not a reasonable expectation of obtaining offers from two or more responsible small business concerns that are competitive in terms of market prices, quality and delivery.
3.12.2 Small and Disadvantaged Business Goals
The DoD Office of Small Business Programs (OSBP) is the DoD’s lead policy office for small business issues. Goals for this small business category are 5 percent of total DoD obligations. The DHA OSBP follows the DoD’s Guidance and has established the DHA Small and Disadvantaged Business category goals at 5 percent.
3.12.3 Women-Owned Small Business Goals.
The Federal Acquisition Streamlining Act (FASA), of 1994 Section 7106 amends the Small Business Act to add a 5 percent goal for Women-Owned Small Business concerns.
3.12.4 Other Socio-Economic Programs.
The FAR Part 26 provides guidance on additional socio-economic programs such as:
3.12.5 Monitoring and Reporting Requirements.
DHA is required to measure the extent of small business participation in DHA acquisition programs by taking the following actions:
3.12.6 Small Business Policies and Procedures.
The DHA Office of Small Business Programs was established and implemented in accordance with DoD Directive Number 4205.01, dated March 10, 2009. The DHA Small Business Website provides small business policies and procedures and a comprehensive introduction to federal procurement in general, and to small business concerns interested in doing business with DHA. It also offers detailed information and links related to small business issues and resources. Small Business policies and procedures can also be found on the AM&S website, Acquisition Policy and Procedures page, http://www.tricare.mil/tma/ams/acqpolicyproc.aspx.
3.13 Cost Estimates
The FAR 4.803(a)(17) requires that COs document the contract file with a determination of a fair and reasonable price for all acquisitions through cost/price analysis. Within DHA an Independent Government Cost Estimate (IGCE) is required as part of the acquisition plan package submitted for procurement, for all source selections over the SAT. Program Offices develop the IGCE as a key early step in the acquisition process. Properly developed IGCEs provide program and task managers with a tool to defend, make tradeoff decisions, and manage their acquisitions throughout the life cycle of the requirement. IGCE related guidance is at: IGCE Guide and IGCE Template and IGCE Example.
3.14 Contract Funding
FAR Part 32.702 states that “No officer or employee of the Government may create or authorize an obligation in excess of the funds available, or in advance of appropriations (Anti-Deficiency Act, 31 U.S.C. 1341), unless otherwise authorized by law.” Before executing any contract, the CO must either get written certification that funds are available from the responsible fund certifying officer or make the contract conditional upon the availability of funds.
3.14.1 Subject to the Availability of Funds.
The award of a "conditional contract" prior to the enactment of an appropriations act does not violate statutory funding requirements. A "conditional contract" is one that
expressly makes the government's liability under the contract contingent upon or Subject to the Availability of Funds (STAF)
FAR 32-703-2. The Government may not accept supplies or services under a contract conditioned upon the availability of funds until the CO has given the contractor notice, to be confirmed in writing, that funds are available. The rationale for issuing actions on a STAF basis, applies in only the following two cases:
3.14.2 Incremental Funding.
FAR 32.7 and DFARS 232.704-70 prescribe the use of incremental funding for certain contracts and require specific clauses to stipulate that funding and the Government’s obligation are limited. A fixed-price contract may be incrementally funded only if:
If b. or c. above does not apply, then neither O&M, nor Procurement appropriations may be used to incrementally fund the contract.
3.14.3 Military Interdepartmental Purchase Request Processing.
Purchase request packages sent by DHA to a contracting office other than the Contracting Center of Excellence (CCE) or USAMRAA are typically funded via Military Interdepartmental Purchase Request (MIPR) (DD Form 448). The MIPR amount must be based on the requiring activity’s best estimate of eventual cost, and MIPR amounts are to be adjusted when new information becomes available. The following procedures will apply:
3.14.4 General Services Administration Will No Longer Accept Funds by MIPR.
GSA has implemented a real-time internet-based application to handle the transfer of funds between agencies known as TOPS (Telecommunications Ordering and Pricing System) and will no longer accept fund transfers via the MIPR system.
3.14.5 Fiscal Year Contracts.
Under this type of contract, performance cannot begin prior to the date of enactment of the appropriations.
FAR 32.703-2(a) states that “The contracting officer may initiate a contracting action properly
chargeable to funds of the new fiscal year before these funds are available; provided, that the contract includes
FAR Clause 52.232-18.” This authority may be used only for O&M and continuing services which are:
The key to a fiscal year contract that is awarded STAF is that contract performance (i.e., the start work date) cannot occur prior to enactment of the appropriation. However, performance does not have to be scheduled for the date of appropriation enactment or the first day of the next fiscal year in the event of a continuing resolution. A conditional contract can be awarded prior to the end of a fiscal year with a start work date programmed some time on or after 1 October of the next fiscal year – provided actual work does not start until some date after enactment of the appropriations or a continuing resolution. A STAF contract can be awarded after the beginning of a new fiscal year in the absence of an appropriations act provided Congress has enacted a continuing resolution, sufficient funds have been apportioned to cover the contract, and the contract does not involve a new start.
3.14.6 Contracts Crossing Fiscal Years.
Since DHA operates with funds that have a finite “life span”, the end of the fiscal year often marks the limits on the use a particular appropriation. The funding of contracts that cross fiscal years is largely determined by the so-called bona fide needs rule: A fiscal year appropriation may be obligated only to meet a legitimate, or bona fide, need arising in, or in some cases arising prior to but continuing to exist in, the fiscal year for which the appropriation was made. An appropriation may not be used for the needs of some time period subsequent to the expiration of its period of availability. For annual appropriations, a more common statement of the rule is that an appropriation for a given fiscal year is not available for the needs of a future fiscal year. The application of the bona fide needs rule depends largely on the facts and circumstances of the particular case. Normally a service contract that is funded by annual appropriations may not cross fiscal years, except if the contract is non-severable.
A service contract is non-severable if the service represents a single undertaking, producing a single or unified outcome, product or report that cannot be subdivided for separate performance in different fiscal years. For example, a contract to re-carpet or paint an office is non-severable – the customer needs the whole thing done; i.e., the end result of the service.
On the other hand, a service is severable if it is continuing and recurring in nature or can be separated into components that independently meet a separate need of the government. Most program support contracts are continuing and recurring in nature, and therefore are severable requirements. As a general rule within the federal government, severable services are a bona fide need of the fiscal year in which performed, may not cross fiscal years, and must be funded with an appropriation that is available at the time the service is provided. Fortunately, DoD has been granted a statutory exception to this general rule. U.S. Code 10 U.S.C. 2410a provides authority for the Secretary of Defense to enter into contracts for severable services “for a period that begins in one fiscal year and ends in the next fiscal year if (without regard to any option to extend the period of the contract) the contract period does not exceed one year.” For example, under this authority a contract for severable services with a period of performance (POP) that runs from August 15, 2006 up to August 14, 2007, may be funded with FY06 funds. Under no circumstances should any order for severable services entered into as part of an interagency agreement, using O&M funds, extend beyond one year from the date the funds were accepted by the servicing agency (reference USD(Comptroller) memo Subject: Proper Use of Interagency Agreements with Non-Department of Defense Entities Under Authorities Other Than the Economy Act, March 27, 2006).
3.14.7 No Cost Extensions.
Occasionally a requiring activity requests a no-cost extension to use expired funds remaining on a severable service contract, but while 10 U.S.C. 2410a provides authority for a severable contract to cross fiscal years, it does not automatically give agencies the right to extend severable contracts based on lack of acquisition planning, or in order to “save” funds that have been placed on the contract. A no cost extension for a severable services contract that causes the POP to exceed 12 months, or if funded by O&M, to extend beyond one year from the date funds were accepted by the servicing agency, is not authorized and may result in a violation of the anti-deficiency act.
3.14.8 Special Funding Issues.
Some of the more recent DoD and DHA policy guidance memos on special funding topics are included below:
3.15 Contractor Access to Classified Information
All contractor personnel who will have access to classified information must possess a security clearance. This requirement must be referenced in the contractor’s awarded contract. The following are the DHA internal procedures for establishing the requirement for contractor personnel to obtain security clearances.
3.15.1 Documenting the Requirement.
The requiring activity specifies in the PWS the requirement for contractor personnel to have access to classified information, and to possess security clearances. The PWS identifies which positions to include, the labor categories, and locations. The requiring activity also prepares a DD Form 254 “Contract Security Classification Specification”.
3.15.2 Coordination and Review.
The requiring activity forwards completed DD Form 254 and PWS package for the new contract/modification to the DHA Security Office (7700 Arlington Boulevard, Falls Church, VA 22042, (703-681-8707), who will then coordinate with the Office of the Secretary of Defense (OSD) Industrial Security Program, Defense Protective Service for review and signature. The requiring activity also provides a copy to COD-FC for their concurrent review.
3.15.3 Contract Award.
After the package is coordinated with the OSD Industrial Security Program, the DHA Security Officer will notify the requiring activity and the requiring activity will notify COD-FC. COD-FC will then forward the package to the contracting activity for award. The CO awards the contract or modification and signs the DD Form 254.
3.15.4 Filing Requirements.
The requiring activity forwards the completed DD Form 254 and a copy of the awarded contract/modification to the DHA Security Officer. The DHA Security Officer forwards the signed DD Form 254 and awarded contract/modification to the Pentagon Force Protection Agency for their files.
3.15.5 Clearance Processing.
The contractor security manager submits the necessary information to the Defense Security Service (DSS) to process the security clearance for contractor employees. DSS processes the clearance request and provides the results to contractor security manager.
3.15.6 Contractor Documentation.
The contractor security manager provides the DHA Security Officer with a visitor request, non-disclosure form, and letter of consent for employees acquiring access to classified information.
3.18 Acquisition Timeline
A major full and open procurement can often be a long process with many complex steps and milestones along the way. Acquisition planners should have an understanding of the approximate milestones for major full and open procurements, so they can allow for the necessary lead-time. The actual duration of each step will vary for different procurements depending on value, complexity and other factors. A Microsoft Excel version is available at Excel Timeline. This generic timeline is meant to serve only as a guideline for requiring activities to better understand the sequence of events for full and open procurements and should by no means be considered as “set in stone”.
3.19 Support Agreements
Please contact firstname.lastname@example.org for information.
5.0 CONTRACT ADMINISTRATION
5.1 COR Responsibilities
After contract award, the COR takes a leading role in managing the technical elements of the contract. Should a COR need to be replaced due to turn-over or for other reasons, submit a completed COR Nomination Form to COD-FC. The COR must:
For detailed information on COR responsibilities, see TAD 01-06, Enclosure 2 and PGI 201.602-2.
5.2 COR Files
Documentation is an essential duty of the COR. After being appointed COR, create a file record for each contract or order. These records become part of the official contract file. Place notes or memoranda documenting all actions and decisions in the file. Remember that documents should include a signature and a date. Note the date, time, place, and persons involved when meeting with contractor personnel. Upon contract close out the COR must send this file to the CO for retirement. As a minimum, files must contain a copy of the following documents:
5.3 Post Award Kick-Off Meeting
After a contracting office awards a contract, a post award kick-off meeting may be held. A post award kick-off meeting is a planned discussion between the COR and other appropriate Government representatives, and the contractor that focuses on understanding the technical aspects of the contract, identifying and resolving oversights, preventing problems, averting misunderstandings, deciding how to solve problems that may occur later, and reaching agreement on common issues. A post award kick-off meeting may be a structured meeting chaired by the CO, an informal meeting between the contractor and the COR, or a teleconference. The CO will decide on the format and may request assistance from the COR in preparing for and conducting the post award kick-off meeting. Topics may include such things as an overview of the work to be performed, recent changes in regulations, discussion of any applicable procedures or processes, and an opportunity for the contractor to provide input.
5.4 Contract Surveillance
The Government always has the responsibility to conduct surveillance over the expenditure of public funds. Contract surveillance helps to ensure the Government receives the services for which it contracted and pays only for the services it receives. As discussed earlier, contract types often dictate how and when the contractor can charge for their services. Contract surveillance should be tailored by contract type so that key factors contributing to Government costs are monitored closely. The COR should develop quality assurance surveillance records, including surveillance checklists and schedules, and related files. The COR shall adhere to the instructions in the TAD 42-02, Monitoring Contractor Performance, February 16, 2012, PGI 242.15-91, May 21, 2012, and DHA Briefing “Monitoring Contractor Performance”. The DHA AM&S COR Review Checklist should be used for contract surveillance.
5.4.1 Surveillance Activities.
Contract quality surveillance is an essential activity. In most cases, contract quality surveillance is the responsibility of the requiring organization, the organization most familiar with the technical complexities and nuances of the requirement, with assistance from the contracting office. The requiring organization prescribes contract quality requirements that the contracting office includes in contracts. Members of the requiring organization are designated specific authority by the CO to conduct contract surveillance as a COR in order to verify that the contractor is fulfilling contract requirements and to document performance for the contract record. These CORs function as the eyes and ears of the CO and are a liaison between the Government and contractor when executing surveillance responsibilities. COD-FC will monitor these surveillance activities to ensure that the proper measures are being taken to protect the Government’s interests. COD-FC will regularly check a sample of active task orders to ensure that the PMO is performing effective contract surveillance.
5.4.2 Restrictions on Performance Monitoring.
Over zealous surveillance could be construed as Government direction, and could potentially release the contractor from accountability. Performance monitoring does not include controlling the way the contractor performs, except when imminent environmental, safety, or health hazards dictate. This is especially true for performance-based contracts, since the contractor is held accountable for the performance outputs to be delivered under the contract/order, and not for the steps required or procedures used to provide contracted products or services.
5.5 Communication with Contractors
Since communication between the Government and the contractor often is the basis for the contractor to do or not do something, in accordance with
FAR Part 1.602-3, the COR must take great care about what he or she communicates to the contractor. This applies to both oral and written communication. Always exercise care so as not to accidentally generate the basis for claims or delays. Be familiar with terms allowing the contractor to request action by the Government. If in doubt, consult the CO. If the contractor asks questions, be aware of and enforce proper procedures on when and how the contractor should present requests. Respond to the contractor’s properly submitted request within the timeframe set by the contract. Forward any questions to the CO in sufficient time to permit a timely response. When conveying technical or assessment information to contractor personnel, it is critical not to instruct, supervise or attempt to control contractor efforts except as specifically authorized in the contract.
5.6 Avoiding Constructive Changes
A constructive change occurs when, because of Government action or inaction, a change has occurred in the circumstances of the contractor’s performance, and the change results in an increase or decrease in the cost or period of performance. The COR must not give any guidance to contractors, either orally or in writing, which might be interpreted as a change in the scope or terms of the contract. The COR is responsible only for giving technical guidance to assure that the technical scope and terms of the contract are met. The COR may be held liable in constructive change situations. If it appears a constructive change has occurred, notify the CO immediately. Provide the CO as much detail as possible regarding events leading up to the situation. The CO requires information in order to determine if a constructive change actually occurred and to determine an appropriate corrective action. Therefore, it is important to keep records about any situation. Common causes include inadequate or latently defective specifications, improper interpretations of specifications, overly strict inspections, Government-caused delays, or improper technical direction.
5.8 Contractor Identification
It is imperative that both Government and contractors make the status of contractors’ staffs clear at all times. Ensure that no Government employee inappropriately affords a contractor access to situations where
sensitive information is being distributed and/or discussed. Contractors must wear a badge identifying themselves as contractors at all times.
DHA PGI 211.106 implements
FAR 11.106(b) and
DFARS 211.106 by providing standard language that shall be included in the purchase descriptions, and in all solicitations
and contracts with a line item that that includes services regardless of the source of funding.
5.9 Security Procedures
The COR must ensure that the contractor understands all security requirements within the contract. The COR should request and review the contractor’s security related written procedures (classified information, protected health information, etc.), and should consider checking those procedures as part of their QASP reviews. The COR should specify the location of the facility, the times of day, and days of week that the contractors’ personnel may access the facility, and whether contractors and contractor staff are authorized to access the facility when Government staff are not present. Contractor personnel must track and protect any issued keys or entry codes.
5.10 Handling Issues or Disputes
The Government’s policy is to try to resolve all contractual issues by mutual agreement at the CO’s level. Reasonable efforts should be made to resolve controversies prior to the submission of a claim. The FAR
defines an "issue in controversy" as a material disagreement between the Government and the contractor which: may result in a claim; or is all or part of an existing claim.
Procedures for addressing contract issues or disputes are covered within FAR Subpart 33.2.
5.10.1 Alternate Dispute Resolution (ADR)
DHA officials are encouraged to use ADR procedures to the maximum extent practicable, in accordance with FAR Subpart 33.214.The objective of using ADR procedures is to increase the opportunity for relatively inexpensive and expeditious resolution of issues in controversy. ADR procedures may include, but are not limited to, fact-finding, mediation, mini-trials, and arbitration. It is important for the program office and COR to provide any assistance the CO needs to close this matter expeditiously.
5.11 Cost/Price Reporting Requirements
COD-FC has developed a standardized format which can be used in situations where contractor cost reporting and contract “burn rate” monitoring is necessary. The CO will provide the appropriate report for the program use. Contract Vehicle Cost Reports can also be located on the COD-FC Intranet.
5.12 Cost Monitoring
When using cost reimbursement type contracts, the Government must monitor costs and funding. The COR should use all available information to anticipate both over-runs and under-burn. The COR must avoid formal or informal action that would lead a contractor to exceed the contract cost limitation. They should likewise remain vigilant of any potential under-burn that could free up resources that might be applied elsewhere within their program or within DHA.
FAR clause 52.232-20, Limitation of Cost and
FAR clause 52.232.22, Limitation of Funds require a contractor to give advance notice if they believe an overrun will occur. The COR will monitor contractor compliance and should immediately notify the CO in cases when an overrun seems likely. Communications from Government personnel should avoid any implications that might justify an assumption by the contractor that costs beyond the existing limitation may be incurred. All CORs should note that encouraging a contractor to continue work in the absence of funds may result in a violation of financial management statutes and may subject the COR to criminal penalties.
Towards the end of each and every period of performance, the COR should conduct a thorough assessment of funds remaining on the contract based on historical data and what the contractor is required to do prior to the end of the order. Any funds determined available for deobligation should be immediately brought to the attention of the DHA Finance Operations Division.
5.13 Invoice and Receiving Report Procedures
The contractor’s invoice and the receiving report are vital aspects of the contract administration and contractor payment process. A contractor’s invoice represents a bill or written
request for payment of materials and services rendered. A receiving report documents the receipt, inspection, and acceptance of materials and services by authorized
personnel. Under most circumstances, the Defense Finance Accounting Services (DFAS) cannot make payment to a contractor without a valid invoice and receiving report
confirming the vendor has met contract specifications. To the extent possible, the Wide Area Workflow (WAWF)
system should be used to submit electronic payment requests and receiving reports in accordance with
DFARS 232.7004. WAWF documents will
not process properly unless the correct routing information (in the form of a two-part location code) is entered when the contractor submits their WAWF documents.
DHA WAWF Location Codes
have been established for DHA offices that administer DHA contracts. COD-FC has developed an
Acquisition Systems Access Forms and Registration Guide to serve as a ready reference for
DHA CORs and contractors using WAWF for DHA contracts/orders.
Cost-reimbursement, T&M and LH contracts payment requests are processed within WAWF using the Public Voucher format. DHA CORs perform interim approval for
both contractor and COMBO format invoice/receiving reports using the WAWF Acceptor role.
5.14 Contractor Past Performance Data
Past Performance information consists of relevant data regarding a contractor's actions under previously awarded DoD contracts. It is a mandatory non-cost factor, which could justify award to other than the apparent low cost/price offeror. The Federal Acquisition Streamlining Act of 1994 (FASA) specified that past performance is a relevant factor to consider in contractor selection.
5.14.1 Federal Past Performance Information Retrieval System.
In July 2002, DoD endorsed the Federal Past Performance Information Retrieval System (PPIRS) as the single, authorized application to retrieve
contractor performance information. PPIRS is a web-enabled, enterprise application that provides timely and pertinent contractor past performance information to the DoD and Federal acquisition community for
use in making source selection decisions. PPIRS assists acquisition officials by serving as the single source for contractor past performance data. Confidence in a prospective contractor's ability to satisfactorily
perform contract requirements is an important factor in making best value decisions in the acquisition of goods and services. PPIRS consists of two components, Report Card (RC) and Statistical Reporting (SR). Both
components support the FAR requirement to consider past performance information prior to making a contract award (FAR Parts
The Contractor Performance Assessment Reporting System (CPARS) is one of several tools DHA is using to meet DoD’s paperless contracting mandate. The DHA CPARS Focal Point is designated by the Head of the Contracting Activity (HCA). The HCA serves as a resource for information regarding the CPARS and the input of CPARS information. The DHA CPARS Focal Point is the Acquisition Information Systems Manager (AISM), AM&S Directorate. The Focal Point designate must register the eligible contract in CPARS within 30 calendar days of award.
The Assessing Official (AO) is ultimately responsible for completion of a CPAR. DHA’s CO serves as the AO for all CPARS-eligible DHA contracts unless otherwise designated by the cognizant COD Chief.
CPAR documents the assessment of the contractor’s performance either positive or negative. The AO shall prepare a CPAR in accordance with applicable regulations for each contract, when the aggregate
value of the contract exceeds the thresholds as provided in Table 1 of the DoD CPARS Policy Guide. A CPAR must be completed within 120 days of the end of the assessment period.
To begin this process, within 30 days of the end of an assessment period (contract completion, basic or option period) the COR will enter an evaluation of the contractor's performance into CPARS. The contractor then receives an opportunity to comment on the evaluation and the CO completes the process to create a permanent record. For additional helpful information on CPARS see TAD 42-01, Rev. 001, Contractor Past Performance Information, March 12, 2012, PGI 242.15-90, May 21, 2012, and DHA Briefing “Collection and Reporting of Contractor Past Performance Information”.
Data from CPARS is automatically uploaded into the PPIRS and may be accessed by authorized officials for use in source selection proposal evaluation. The PPIRS requires government users to request an account on the first use, and to log in for subsequent use. A good place to start for new users is the Frequently Asked Questions (FAQs) hyperlink found on the PPIRS Web Site. reserved515
5.16 Defense Contract Audit Agency Support
DHA will maximize the use of Defense Contract Audit Agency (DCAA) in managing and auditing DHA contracts, to include ensuring that contracts allow for appropriate involvement of DCAA in auditing activities. Procedures on
contract audit services are covered within FAR Subpart 42.1.
5.16.1 Requesting Audit of a Contract.
Officials who feel an audit of any DHA contract is warranted should discuss the need with the appropriate CO. COs may request audit services directly from the DCAA. The audit request should include a suspense date and should identify any information needed by the CO.
5.16.2 Projecting Audit Requirements.
Prioritizing audit requirements and early communication of these requirements to the CO and the DCAA helps in projecting the audit workload. Specifically stating in the audit request any special information that should be included in the audit report makes the audit effort more effective and the audit report more useful.
5.17 Government Furnished Equipment
During contract performance, the Government may provide government furnished equipment (GFE) to a contractor. A list of this GFE needs to be included in the RFP so it can be incorporated into the contract. If GFE is provided to the contractor after performance begins, it too must be incorporated into the contract, by modification, if necessary. The CO may request the COR help transfer GFE to the contractor, ensure an inventory is conducted prior to transfer, manage GFE return, and perform other related functions.
5.18 Contract Modifications
5.18.3 Requirements and Suggestions.
All modifications must be made in writing. Bilateral modifications may be initiated by either the Government or the contractor. Being proactive by recommending an appropriate modification should avoid claims later. In all cases, the changes to the contract must be within the scope of the contract meaning that both parties contemplated the work when they entered into the contract. New work cannot be accomplished by modification unless under certain conditions and a J&A is signed. As part of the modification process, the COR may be called on to provide documentation. This can include background, rationale, PWS material, cost/price information, delivery information, and suggested contract language. The COR may also be called on to conduct a thorough analysis of the effects of the proposed change on other contract areas, provide a technical evaluation of the proposed change, and assist the CO in negotiating the change. The technical evaluation includes the reasons for the change, a statement that the change is within the scope, a statement that the technical requirements of the contract do not cover the proposed change, and describes the impact of the proposed change on price; delivery; and performance. Perform all modification-related tasks in a timeframe that does not jeopardize the Government's mission or delay the contractor’s performance.
5.19 Exercising Options
Contracts or task orders in support of DHA may contain options if it is in the Government’s interest. Exercising an option requires advanced planning and effort on the part of the COR and the CO. Early
notification of intent to exercise an option is very important. Two steps must be taken by the COR before an option can be exercised:
5.19.1 Conduct Market Research.
In accordance with FAR Part 10, prior to exercising an option, the CO must determine that it is in the best interest of the
Government. To support this decision, the COR must conduct market research to determine the current cost/price of the same or similar services. The COR must also determine whether there have been
significant technological changes in the marketplace. Market research efforts should commence not later than six months prior to the end of the current period of performance. For additional information see the
DoD Market Research Report Guide, April 2012 and the DHA Briefing “Conducting Market Research.
5.19.2 Request the Option be Exercised.
Before an option can be exercised, the CO must provide written notice to the contractor within the time period specified in the contract. If this notice is not provided within the specified timeframe, the contractor can legally refuse to perform the option, and the Government may have to enter bilateral negotiations to obtain the goods or services covered by the option and as a result may incur additional payments to the contractor. To allow the necessary time for review and processing, the COR should send a memo (see Cover Memo for Exercising Options) through COD-FC, to the CO well in advance of the time specified in the contract. Since contracts typically call for the CO to notify the contractor 60 days prior to the end of the current period of performance, the COR must submit this memo through their supporting COD-FC CS at least 90 days prior to the end of the current period of performance. This memo should indicate the intent to either exercise the option or not exercise the option. If the intent is to exercise the option, the memo should include a statement that there is a continued need for the service and a discussion of the impact on continuity of operations or cost to the Government if the option is not exercised, or any other rationale supporting the recommendation that exercising the option is in the best interest of the Government.
5.20 Contract Closeout
Close out occurs when the Government and contractor have fulfilled their obligations, all outstanding contract administration issues have been resolved, and all records are correctly disposed of.
One of two events makes a contract physically complete and closed. One is delivery of; performance of; inspection of; and acceptance of all required supplies or services, finality of all administrative tasks, and
expiration of all option periods. The other is notice has been issued to the contractor stating contract termination has been completed. See
FAR Part 4.804-5 Procedures for Closing Out Contract Files.
The closeout process requires coordination between the CO, the COR, and the contractor. The main COR functions are certifying that all services have been rendered in a satisfactory manner and all deliverables are complete and acceptable. Examples of tasks include, but are not limited to, identifying any outstanding claims or disputes; identifying and recommending deobligation of excess funds; and verifying the return or disposition of Government property. The COR documents poor performance, provides detailed performance information to the CO, archives files, and provides files to the CO.
Contract audit requirements are likely to affect contract closeout on cost-reimbursement contracts. In accordance with
FAR Part 31.201, Contract audits are required to determine the reasonableness, allowability, and allocability of costs incurred under cost reimbursement contracts.
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